Don’t Fall into the Unexpected Expenses Trap

Let’s face it – adulting is hard. How many times have you and your friends sat around talking about the time when you had little to no responsibility? Long before the days of mortgages, kids and car payments. The carefree days when thinking about life insurance, retirement and 401(k)s seemed light years away.

Planning for the future and life’s unexpected events can be overwhelming, but it can also be  extremely beneficial. There’s a sense of financial security that comes with knowing you have a plan in place to handle the curve balls life likes to throw at you.

Create a budget

Having a budget isn’t a bad thing. Consider your budget a reflection of your priorities and values, rather than depriving yourself of the things you enjoy. Creating and keeping a monthly budget is the key to long lasting financial planning. It allows your money to work for you as you’re giving each dollar a purpose. It puts you back in control of your money.

No matter how much your income is, there’s always the potential to spend more than you make. There are several ways to set up a budget, but it ultimately comes down to what works best for you. Check out our budgeting 101 guidebook here.

Build up your emergency fund

There’s a quote that says, “The best laid plans of mice and men often go awry.”

No matter how good or solid our plans may seem, sometimes life happens and our plans are pushed to the side. What happens if your car breaks down, you have to move, or your water heater has to be replaced? Illness and employment are equally as unpredictable. If you are laid off, how long could you pay your bills without living off credit cards or borrowing money? You’re not alone. Did you know that 40 percent of Americans can’t cover a $400 expense out of pocket?

This is why an emergency fund is paramount. Completely separate from a savings account, your emergency fund is specifically designed to cover your necessary monthly expenses.  Ideally, you should keep three to six months’ worth of expenses in your emergency fund at all times. Why? It covers you in the event of a layoff or medical emergency that leaves you unable to work.

Eliminate your debt

Northwestern Mutual’s 2018 Planning & Progress Study showed that the average American has about $38,000 in personal debt, excluding home mortgages. Typically, that debt is a combination of credit cards, student loans, car loans, and personal loans. Credit card debt accounted for 25% of that debt. The study further showed that 2 in 10 Americans spend anywhere from 50% to 100% of their monthly income on debt repayment.

These are staggering facts. But there is hope in those dismal numbers. Getting out of debt takes discipline, and it’s not easy. Start by paying more than the minimum payment. If you’re only making the minimum payment, you’re only paying interest and not attacking the principle. Anything over the minimum payment is applied to the principle and knocks out that balance faster.

There are many helpful methods to reduce debt, and there are several free online and mobile debt repayment tools to help you track your progress as you pay down balances. Check out our credit management and debt reduction guidebook here.

Invest in your future

It’s never too early to invest in your future. If you don’t have a retirement plan such as a 401(k), IRA or stock investments – get one.

If you already have a retirement plan, that’s awesome! Think about increasing the percentage you’re contributing. It helps you save without making an effort, allows you to take advantage of the compound interest, and it reduces your taxable income.

Financial planning is just as personalized as each member we serve at First Financial. Let us help you get your future on track, by making an appointment with our Investment and Retirement Center.* Stop by your local branch or give us a call at 732.312.1500.

 *Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Non-deposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.

6 Easy to Forget Expenses to Include in Your Budget

Creating a budget is never easy, it can take months or even years to perfect the process. Plus, life is always changing so a budget that worked a few months ago might not necessarily work now. One of the most common reasons people find budgeting so hard is because there are so many different expenses to keep track of. The big ones, like housing and food, are pretty obvious. However, often there are little things we forget about that can derail a budget from the start.

The next time you evaluate your budget, consider these six expenses that people often forget to plan ahead on:

1. Celebrations

It seems like every week, we’re always celebrating something. From birthdays to weddings to holidays, our schedules are jam packed with social events. However, we often forget that these celebrations come with hefty price tags. Gifts, travel costs, and party attire can add up quickly. Not accounting for these items can really throw your budget off. For example, if you know you have a few weddings coming up in the next year, be sure to set aside funds to cover any associated costs. Also be sure to increase your budget during the holiday season to account for gifts and travel.

2. Pet Care

We love our pets, but there’s no denying that caring for them can get expensive. We tend to only think of pet care expenses in terms of things they use everyday, like food – but any pet owner knows that there are many other major costs associated with our furry friends. Healthcare, including regular veterinary visits, is a big one. Grooming and pet sitting is another. These are expenses for your pet that may not happen every month, but they’re regular enough that you should include them in your annual budget.

3. Coffee

Any good budget will include a category for food and dining, but don’t forget to include coffee in there as well. We all know how much a cup of coffee can cost – anywhere from $2 for a regular cup to $6 for a latte. Whether you make your own or go to your local Starbucks, make sure you understand how much you’re really spending on your coffee addiction every month.

4. Home Maintenance

Many first time homeowners are unpleasantly surprised by the cost of home maintenance. Aside from utilities and minor repairs, there are several recurring expenses, such as lawn maintenance, landscaping and weather proofing that homeowners often forget. Expenses like these can drive up the cost of owning a home considerably.

5. Me Fund

When we’re trying to stick to a tight budget, we often forget about ourselves. If you’re trying to cut your budget, spending on things you enjoy is likely the first expense to go. Don’t underestimate the value of having a me fund, though. It can be anything, from a night out to a pedicure – but doing even something small from time to time can drastically improve your mood and increase your productivity.

6. Emergency Fund

The one thing people most often forget to account for is an emergency fund. This is also the most important.  In life, you never really know what can happen, and you need an emergency fund to protect you from whatever life throws your way. Your budget should include a portion set aside for emergencies. Many recommend that you have 3 months of expenses on hand at any given moment. You can decide the amount you’re comfortable with and then start to save up for it. Just remember to make this a priority.

Need help setting up a budget? Check out our easy Budgeting Guidebook and Worksheet.

Article Source: Connie Mei for Moneyning.com

4 Simple Categories to Create Your Budget

It’s the new year – do you have a budget plan in place? If not, here are some great places to start!

1. Housing

Having a place for all of your stuff and somewhere to lay your head should probably be your biggest priority, so as you can imagine this category will be a large portion of your budget. Along with the mortgage, insurance and property taxes, make sure you include repairs and necessary utilities like gas and electric.

2. Transportation

Remember that when it comes to transportation, it’s more than just your car payment. Gas, insurance, repairs, and preventative maintenance like oil changes should all be included. Planning ahead will help keep your car on the road, which will keep money in your pocket.

3. Life

This category is huge. Several categories could be made out of this one, but if you want to keep it all together, it should include the following:

  • Cell phone
  • Food (at home or at a restaurant)
  • Health insurance
  • Medicine
  • Clothing
  • Entertainment
  • Tuition
  • Childcare

All of these things will add up to a large percentage of your budget, so if separating them into their own categories will help you, definitely do that.

4. Savings/Debt

This final category is one of the most important. Saving money for your future is something you want to make sure you’re doing every month. The earlier you start, the better. You’ll be surprised at how a little bit each month can really add up. Also make sure you’re steadily paying down your debt, whether it’s credit cards or student loans. Focus on paying them off and enjoy the freedom you’ll feel when that’s all accomplished.

Learn to create your own budget with our handy budgeting worksheet!

Article Source: John Pettit for CUinsight.com

 

How to Recover from a Blown Budget

Went a little crazy on holiday shopping and now your budget is completely off track? Get back on the path to financial freedom and kick off the new year with the following tips:

  1. Stop dwelling. Going over your budget isn’t fun, but it’s not the end of the world. Life happens and you can’t be perfect all the time. Acknowledge that you messed up, then move on. Obsessing about it isn’t going to bring your money back.
  2. Get back into your old routine. Play a little bit of catch up: pay your bills, balance your checkbook, and schedule transfers to pay off some debt if possible. Sometimes when you fall off track, it makes you want to stay off track. It takes more effort to jump back on the bandwagon than it does to remain on the same path. That’s why it’s important to get back into your old routine as soon as you have the chance. Get everything caught up, map out a plan for the remainder of the month, and immediately return to your former routine.
  3. Temporarily cut expenses. If you need to cut back, consider the following tactics:
  • Eat at home until you’ve cleaned your shelves/refrigerator/freezer out.
  • Have “no-spend” days, when you don’t spend a single penny.
  • Skip paid entertainment and opt for board game nights or movies at home.

If you’re still facing a budget discrepancy, you may have to look for extra ways to earn money for the month. Consider selling clothes, furniture, and appliances that are in good condition but that you no longer use. Or can you pick up extra hours at work, or get a part-time job?

If you’ve blown your budget, the important thing is to pick up where you left off and get back to your budget as soon as possible.

Need help creating an organized household budget? Check out our budgeting guide and budgeting fillable PDF worksheet.

Article Source: Alexa Mason for Moneyning.com

A Few Things You Can Cut From Your New Year’s Budget

When it comes to finances, what would you like to do differently in the new year? When looking at your money and the way you spent it last year, what needs to change?

Here are a few things you should remove from your budget in the new year:

Unnecessary daily expenses: We all like coffee every day. But do you really need Starbucks every morning? It’s gets very expensive if you spend at least $5 a day buying coffee. That’s $25 each work week and $100 or more a month!  This will eventually add up to well over $1,000 at the end of the year. Instead, stock up coffee to brew at home and use the price difference to beef up your emergency fund.

Phone apps: The vast majority of phone apps are free, but for a lot of people – spending 99 cents on one here and there doesn’t seem like a big deal. If you’re one of those people who spends a lot of time on your smartphone throughout the day, then it might be time to think about which apps are costing you money (whether it’s up front or from in-app purchases).

Spending with coupons: You’re probably thinking, “this sounds like saving money!” While coupons can be helpful tools, they’re only helpful if the coupon is something you were already planning on buying. Don’t be swayed by a deal or discount if it’s not something you need. Buying things you want (and don’t need), is an easy way to throw money away. Make smart or necessary purchases, and use coupons to make those buys even better.

Kick the new year off right – think savings instead of spending!

Article Source: John Pettit for CUInsight.com

 

5 Easy Ways to Cut Your Spending Dramatically

Trying to trim expenses can seem like a never ending task, as new expenses always pop out of nowhere. With already tight budgets, the task of reducing spending can seem impossible. You’ve already cut out your morning latte and canceled your gym membership – what more can you do?

Lowering your expenses is definitely a daunting task. While you’ll have to make sacrifices and get a little creative, it definitely can be done without cramping your lifestyle too dramatically.

Cut Up Your Credit Cards

Take a close look at your credit card collection if you have multiple cards, and decide which ones you should keep using and which ones you can cut up. First, note the interest rate for each card, and don’t use the ones that charge the higher rates. Obviously, it is ideal to be able to pay off your bill every month – but that isn’t always realistic depending on your situation. Second, take a close look at the rewards programs for each card. Such programs are becoming more and more competitive and can be a determining factor when deciding what your go-to card should be. Also, canceling credit cards can negatively affect your credit score as it lowers your credit to debt ratio. Consider literally cutting them up and forgetting about them instead of really canceling them.

Be Your Own Chef

Food is one of the biggest expenses we face and most people are guilty of spending too much on dining out. Don’t ignore this habit because the expenses can really add up. Cooking more at home can easily and drastically lower your spending.

But what if you hate cooking? Don’t worry, because you can still save. To mitigate this, cook once a week by meal prepping. Make a big batch of whatever you want and portion it out into multiple meals a week. When it’s time to eat, all you have to do is heat it up – even easier than going out.

Ride a Bike

Car maintenance and gym memberships can cost an arm and a leg. Why not kill two birds with one stone by riding a bike? Depending on where you work, riding a bike to your office could be a great option to get a workout in and save money on gas. Many big cities also now have bike sharing programs, which makes it even more convenient to ride wherever you need to go.

Reinvent Your Social Life

Socializing with friends takes time and money. Just having a single drink could cost up to $15 with tax and tip, which can really add up as the night goes on. However, there are plenty of inexpensive or free activities you can do instead. If you’re going out for drinks, consider meeting up during happy hour. While timing might not be ideal, it can cut your bill in half. Also, every city, big or small, has free events, especially during warm weather. So take advantage of them as the weather is warming up for the season.

Analyze Your Bills

Getting a bill is never a fun moment, but be sure to take a thorough look instead of quickly glancing through it. Many of us end up paying fees we don’t realize every month that could easily be avoided. Also, look carefully at your usage every month, particularly when it comes to your cell phone and utilities. Perhaps you could lower your texting plan if you’re not close to using your maximum for the month, while others can easily trim their data plans. Small details like these seem insignificant when you look at them individually, but everything can collectively make a huge difference in the long run.

Article Source: Connie Mei for Moneyning.com